In this brief report I document that the nonfinancial corporate sector is showing impressive discipline in its underlying business operations. By this I mean that the aggregate financial balance is in a fairly strong surplus position, which is stabilizing and rates-hawkish (taken in isolation) looking forward.
Corporations are also involved in financial engineering. The implications of that for corporate credit market stability are harder to assess with the sorts of aggregates that I emphasize here in the interest of macro accounting consistency. But the need for balance sheet discipline does not seem imminent. And even were it to come at some point, the fact that the corporate sectors realoperations do not appear to be overextended would be an important mercy, from a business cycle stability perspective.